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Singapore has become one of the most business-friendly places in the world because of its stable government, low taxes, and closeness to many other countries and markets. More and more companies want to open offices in Singapore so that they can do more business in Asia. A sole proprietorship, a limited liability company (LLC), or a limited liability partnership are all ways to start a business in Singapore (LLP). Each of the three types of companies listed above has its own pros and cons, which are listed below. We hope that we can help you figure out what kind of business is best for you.
Single-Ownership
This type of business is one that you run and operate yourself. Since it is not a separate legal entity, your personal finances are tied to the business. If someone sues your business, they can go after your personal bank accounts, statements, and wealth. Everything that happens in the business is your responsibility.
When you choose to be a sole proprietor, you have to come up with the money for growth and expansion on your own. Not only that, but you will be taxed on your personal income, and if something bad happens to you, the business will have no one to take over. Still, registering a sole proprietorship is the easiest. After you fill out the paperwork at the beginning, you only have to pay a $65 fee every year.
Company with limited liability (LLC)
A limited liability company is not the same as a sole proprietorship because it is a separate legal entity from its owners. This means that if the company is sued, the members of the Limited Liability Company won’t have to pay out of their own money. Only the amount they put into the company will be at risk. Basically, your personal wealth is safe, and only your investments are on display for people to look at.
In a limited liability company, the day-to-day business is run by managers, not by shareholders or investors. As an LLC, the business will pay the corporate tax instead of the shareholders’ personal income. We’ve already talked about how incorporating is more complicated than running a business as a sole proprietor.
Partnership with limited liability (LLP)
A limited liability partnership is like an LLC in that it is a legal entity that is separate from its owners. Liabilities for an LLP are the same as those for an LLC. Partners can only lose and be held responsible for what they have put into the business. They are not responsible for the other partner’s mistakes unless they made the mistake themselves.
But, unlike an LLC, it is common for the partners to own and run the business together; there is no separate management team. So, if they mess up, they can be held personally responsible.
When it comes to taxes, the partners will have to pay taxes on the money they make from the business as part of their personal income tax returns. And setting up an LLP is easier than setting up an LLC. You have to pay an enrollment fee of $165 and sign a legal partnership agreement. In order to be in compliance, you will also have to give the authorities an annual declaration of whether you are solvent or not.
Setting up a business in Singapore is an attractive idea, no doubt about it. But your budget and other resources will help you decide which type of entity is best for your business structure.
Different kinds of businesses need different ways to set up their businesses. Find out which type of company will work best for your business before you start a business or incorporate it.
Private company whose shares are limited
(i) Private Company: In a private company, there can be no more than 50 shareholders.
(ii) Exempt Private Company: An Exempt Private Company (EPC) is a private company with at most 20 shareholders, none of which is a corporation. It can also be a company that the Minister has announced is an EPC (see section 4(1) of the Companies Act).
Open to the public
i) Public Limited Company by Shares
More than 50 people can own shares in a public company limited by shares. Shares and debentures can be sold to the public to raise money for the company. Before selling shares or debentures to the public, a public company must file a prospectus with the Monetary Authority of Singapore.
ii) Public company with limited liability
As a guarantee, the members of a public company limited by guarantee contribute or agree to contribute a set amount to the company’s debts. It is usually formed to do things that don’t make money, like promoting art, charities, etc.
As a business owner in a different country, you might be interested in investing in a company extension in Singapore. This is because Singapore is one of the best countries in the world for business, with flexible laws and tax rules that are good for businesses.
If you are not from Singapore and want to start a business in the country, it is best to hire a professional firm that can help you with the company incorporation process. You also need to know what kinds of foreign businesses you can set up in Singapore.
1. Parent Company
A subsidiary company is a local company that is set up as a private limited company. Most of the owners of this kind of business are other companies, either from the same country or from another country. A subsidiary company lets companies from outside the country own all of its shares.
A subsidiary company in Singapore is seen by Singaporean law as a separate entity from its foreign parent company. As a local Singapore company, the subsidiary company in Singapore has to follow Singaporean law. The foreign company is not responsible for its subsidiary company’s debts and liabilities. This kind of business entity works best for small and medium-sized businesses.
2. Office of a branch
A branch office in Singapore is a company that acts as an extension of the parent company that is based somewhere else. It can do the same business as the parent company and even send its profits and capital back to the parent company. A branch office in Singapore will only have to pay taxes on the money it makes from doing business in Singapore.
Any actions done by the Singapore branch office will be the responsibility of the office head of the foreign company. If a medium-sized or large business wants to do more business in Singapore, they should open a branch office.
3. Office of the Representative
A representative office of Singapore is a temporary office that is set up for a certain amount of time. Setting up this kind of office lets foreign companies keep an eye on the market or take care of business in Singapore. But a representative office isn’t allowed to do any business that would make money. A representative office in Singapore also can’t sign contracts, trade, make invoices, rent warehouse space, or open letters of credit in any way. The activities of the representative office are the responsibility of the parent company. Companies or people usually set up a representative office in Singapore to learn more about the business environment there before they start doing business there. Click here for more information.
Make sure to find out more about the company registration process for each type of business you want to start in Singapore, and make sure you have everything you need for the next steps in starting your business. Take note of the details of the requirements you must meet in order to set up your business successfully. The more you can follow the rules and regulations, the easier it will be for your business to grow.
Source: types of companies in singapore , nature of business list singapore
